Enterprise Risk Management Technology Guide 2019 :: Aon: Improving the modelling process

Aon: Improving the modelling process

Actuaries face many modelling challenges in today’s fast-changing insurance landscape. But Aon’s ReMetrica platform can help them, says Paul Maitland, the provider’s head of risk software

How has Aon improved the modelling process for insurers?

Paul MaitlandReMetrica is designed to allow re/insurers to bring insightful and risk-based financial modelling to their decision making. The interface has been built to allow actuaries to design and create models quickly and efficiently, meaning less time is spent on building models, and more time in making decisions.

An example of ReMetrica in practice is where we created automation workflows for a large domestic Asian insurer. The insurer’s existing reserving and loss development processes, were spreadsheet-based with many manual steps.

Aon designed workflows that streamlined and integrated data extraction, processing, estimation and model building steps. This meant the insurer could independently calculate its own input parameters needed for IFRS 17 implementation and regulatory compliance.

How is Aon helping insurers prepare for IFRS 17?

In July, Aon announced it had added components to its ReMetrica capital modelling platform to help insurers implement IFRS 17, the accounting standard for insurance contracts.

The increased volume of data and complexity of calculations required for IFRS 17 mean that actuaries can no longer rely on manual processes and spreadsheets as they feed business-critical inputs into accounting systems.

Insurers therefore need to invest in new technology to bridge the gap between risk and finance.

ReMetrica’s new IFRS 17 components can support actuaries by automating calculations and cash flow projections with flexibility and a transparent audit trail.

They can also help carry out an eligibility test for the simplified model, and identify if a contract is onerous and track its account balance over time.

What are the key modelling issues for actuaries and insurers today?

We have seen demand on actuaries grow over the last few years and they are trying to do more, but with the same amount of resources.

Actuaries today need to be able to continually prepare data for all of the new accounting and solvency standards. The business needs them to price new types of risk, but also to use existing data better for pricing existing risks.

Our automation workflows are a great example of a tool which helps people to streamline their processes. Often data needs to be prepared to go into a model for calculations, then the data needs to be sorted, stored and sometimes passed on to other systems.

Workflows are a simple, but effective tool that can achieve this by allowing non-technical users to design custom processes without the need to do any coding.

With ReMetrica, users are now able to report and project balance sheets under IFRS 17 accounting rules as well as GAAP, and Solvency II fair value, and others.

We also see our powerful Application Programming Interface (API) being used by some reinsurers to embed ReMetrica into their pricing tools. ReMetrica is used as the calculation kernel of pricing systems.

What new risk management software and services or enhancements does Aon plan over the next year?

We are currently working on a number of major new developments, namely our super-fast Gen 3 components. We’ve kept catastrophe reinsurance modellers in mind and put a lot of focus into the planning of these new components, enabling them to run on both CPU and GPU servers for lightning fast run times.

in addition to this, we are extending our cloud hosting capabilities so that clients can just turn to Aon for hardware and software without having to go through lengthy IT budgeting processes.

The cloud offers the flexibility of accessing the latest technology with the additional benefit of only paying as and when it is needed. The service is also suitable for business continuity situations by allowing on-demand access to hardware from any location.

 

Paul Maitland

T: +65 65120216

E: [email protected]